Are Co-Owners Entitled to Rent?

In Louisiana, people can become co-owners of immovable property through various means, but the two most common methods are through marriage/divorce and through succession. No matter how the property is acquired, it is universal that there must be consent of all of the co-owners, no matter how many, to sell, encumber, or lease the entirety of the property. This can often lead to fights amongst business partners or even family. It is important to know your rights as a co-owner including whether you are liable for rent, if you can seek reimbursement for expenses, and how you can initiate the sale of a property.

Co-Owners’ Liability for Rent

Each co-owner has an equal right to the use and occupancy of the entire property without paying rent to the other co-owners. Louisiana Civil Code Art. 802 provides that while all co-owners are entitled to use and occupy a thing held in co-ownership, they cannot prevent another co-owner from making such use of it, and that each co-owner has the right to use and enjoy the thing as if he were a sale owner.

The Louisiana Supreme Court holds that co-owners need not pay rent to another co-owner for his exclusive use of co-owned property; however, recent decisions show that when a co-owner refuses a demand for occupancy from another, the disenfranchised co-owner has a right to rental reimbursement. In other words, two siblings who inherit property after their parents pass cannot seek rent from one another unless one sibling lives in the inherited property and refuses to allow the other sibling to do the same.

Co-Owners Liability for Expenses

The Louisiana Civil Code holds that when a co-owner has incurred necessary expenses, and expenses for ordinary maintenance and repairs, he is entitled to reimbursement from the other co-owners in proportion to their shares. However, the law adds a caveat to say that reimbursements will be reduced in proportion to the value of the enjoyment of the co-owner.

This article serves to state that while co-owners are equally responsible for maintaining the co-owned property, if one co-owner lives on/at the property exclusively, he shall be liable for paying most, if not all, of the maintenance expenses.

Selling Co-Owned Property

Louisiana law is clear that no one may be compelled to own something with someone else and that nay co-owner has a right to demand partition of the thing held in co-ownership. One exception is if there is an agreement not to partition a property for a maximum time period of fifteen years. A partition is a sale of the co-owned property and can take place in two forms: in-kind and by licitation. An in-kind partition is possible when the thing to be divided is a large tract of land which can be divided among the co-owners without diminishing the value of their interests. Much more common, partition by licitation involves the judicially ordered sale of a house at public auction. Partition by licitation also comes with a catch: since the sale is via public auction, the property may not fetch near market price. For that reason among others, once a lawsuit is filed to partition a property, there is often a settlement amongst the owners to list the property for sale privately so that they can maximize the sales price.

Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.